Ah, I love being from Kerala. Now I can claim genetics as the reason for my refusing to shop at Wal-mart. Ha!
The Communist government of Kerala is threatening to ban “retail giants” from setting up shop in the Indian state. The measure, which appears to be backed by all the major political parties in Kerala, is chiefly aimed at India’s version of Wal-Mart, Reliance Industries. The concern is that a proliferation of large retail outlets would drive tens of thousands of mom-and-pop shop operators out of business. [Salon.com]
Hmmmm. That last sentence explains why I prefer Olsson’s > Borders, too.
Kerala made headlines not so long ago for attempting to ban Coca-Cola; the state has a long history of pursuing its own unique path to development. Naturally, the more gung-ho-for-capitalism elements of Indian society aren’t mincing their deprecating words: An editorial in the Indian Express made no attempt to restrain its sarcasm:
Coke poisons people. Highway tolls exploit them. Fiscal discipline starves projects that can better their lives. So, of course, big retail chains, as Kerala’s Left explained to this newspaper on Monday, are anti-people … Food minister … C. Divakaran is ever so bold in proposing to ban a business activity permitted almost everywhere bar places like North Korea. [Salon.com]
Yo, I totally feel exploited by highway tolls. It’s the only thing I don’t miss about driving to NYC. Anyway, I think it is a bold move, and an interesting one at that. Salon’s Andrew Leonard raises a sobering point:
Let’s switch venues. The safety of Chinese-made products is in the news again today, as China’s government announced that a whopping one-fifth of the products on the shelves of Chinese stores were found to be substandard or tainted. The immediate, and understandable impulse, is to blame the health hazards of Chinese products on the lack of regulatory enforcement in China, a state of affairs exacerbated by state corruption, a weak judiciary, and a general absence of effective checks and balances in Chinese society. But that’s only one-half of the picture. The other half is the imperative, in the biggest markets for Chinese exports, that demands ever-lower prices for everything.
In “The Wal-Mart Effect,” Charles Fishman makes a compelling argument that Wal-Mart’s market power inevitably forces its suppliers to cut corners on quality in order to deliver the lower and lower prices that Wal-Mart demands. So those suppliers close their American manufacturing facilities and start sourcing their products in China — if they don’t, they’ll lose their place on Wal-Mart’s shelves. [Salon.com]
Mein Gott, I’m starting to feel like a very pink democrat…
But the symbolism of Kerala’s “bold” move, however quixotic, is still potent. Markets left to themselves do not deliver perfect outcomes. Sometimes government has to push back.
Indeed, especially since those sell-outs in Bengal don’t have the stones to do so. 😉
Interestingly, in the other Left-ruled state of West Bengal, Chief Minister Buddhadeb Bhattcharjee has rolled out the red carpet to Mukesh Ambani’s ambitious retail initiative, though coalition partners have expressed their reservations on the issue. [CNN-IBN]
Compare that reaction to THIS thenga-flavored one:
“The public mood is against Reliance, so we will stop them in their tracks,†Food and Civil Supplies Minister, C Divakaran said. [CNN-IBN]
Eurodesi:
That comment was not aimed at you. It was directed towards the comment which came after you, which had been deleted. You also missed the fact that I posted the exact same comment on two other threads.
If by preferring “European” discourse”, you think it superior to dance around your distaste and tell me what to broaden, then that is your right. Many “Americans” would childishly prefer the brittle, blunt truth, i.e. “I disagree with you”. Many humans would merely courteously ask for clarification re: my comment. Please try that next time.
Rahul: “I read the excerpts in the New York Times, and didn’t feel compelled to go read the whole book because I wasn’t sure what mental nutrition I’d get out of it.”
–> The last section of the book where he tries to feed himself a meal strictly from nature, is boring but other sections of the book about food industry in general and organic industry in particular were interesting.
Eurodesi, I’m dumbfounded by your comment, because you seem to reversing the European and American attitudes on their very heads.
If you’re referring to the AYL(American Yuppie Liberal) attitude, it is atmost the same as the “European” attitude; but then unlike in Europe this demographic does not have any real power, if it did the US would have become another French and Indian wasteland as well. The so called brash and reality driven American attitude is still alive and dominant.
Kerala does look like a karela on the map.
Melbourne Desi: I call Kerala out on Coke because I don’t believe in the nanny state. I actually do agree with Kerala’s decision to go open source for state government SW needs. What I feel was stupid was the accompanying red manifesto that came along with the state’s decision that was widely published….it discourages MNCs from setting development offices in the state. Business looking to locate in India see that the decision was not based on sensible reasons (i.e. performance, cost, opportunity for local companies to generate revenue from support fees) but rather hostility towards industry (i.e. lets stick it to the capitalist pig). I’m a pragmatist, the Communists do deserve credit for addressing what I feel are the two most critical issues (i.e. health & literacy) early on. But all their chest thumping now is based on an economy where Malayalee’s go in search of their futures elsewhere in India, the Gulf etc. Sad because I feel that the state should be the seat of India’s knowledge based economy
All the sound bytes of Achuthanandan’s govt sounds nice. But the fact remains the Kerala govt has failed miserably to create any major industries. How many Mallus do you know who actually work in Kerala ? Kerala is not all hunky dory as it is made out to be. Here’s an interesting article from outlook (registration required) in 2004 which presents some of the ugly sides of Kerala. For example it has the highest crime rates and unemployment rates in India, higher than even Bihar. Who was that claiming that Kerala has a low unemployment rate ?? Banning a Reliance here and a Coke there no doubt makes an ideological statement, but all this empty rhetoric counts to nothing compared to the state’s monumental failures in creating jobs. The economy of Kerala is based out of remittances from Gulf and other Indian states.
Anna,
I realize that your taste for Olsson’s over Borders and your refusal to shop at Wal-Mart are your personal choices. But isn’t it disturbing to you that your government has already made your choices for you? In condoning the Communist Party’s actions, you fork over your personal freedoms to a government that claims it knows what is best for you.
It is true that for many public goods and services, we hand over control to the government. Some of them have enormous positive externalities that would be inappropriately provided by private entitites. Others are natural monopoly. But neither situation applies to the retail business. Let me illustrate to you some of the finer consequences of relying on a ma-baap government:
1) Rajiv Gandhi once said that of every Rs. 100 in development funds, only Rs. 1 reaches the intended beneficiary. The rest, by implication, are pocketed by middlemen, particularly bureaucrats. Why? Because rules are not transparent, bureaucrats have monopolies over handing business licenses and contracts and the marginal consumers in our society have no access to markets or pricing information. All because of government intervention in the market. 2) In the 70s and 80s the very same Communist Party you endorse today, opposed the introduction of computers into local businesses, fearing they would displace local workers. Kerala today is leagues behind Bangalore, Chennai or Hyderabad in producing software for this reason. Moreover, it is only recently the very same Party has begun to reluctantly admit the benefits of computers and the promise they hold to ensure the provision of fair and just government services to the public. Why should the public pay the price for an obsolete ideology and government paranoia? 3) Kerala has an excellent history of mass literacy programs, partly due to the Communist Party. Its public schools are however, a different story altogether. Regular cancellation of examinations, violence, bunking of classes are the order of the day in many of these schools, mainly because they are centers for excessive student activism. None of these student activists are directed at meaningful constructive activities; instead, most of them are local representatives of political parties that threaten each other and are mere recruiting grounds. Public schools, particularly high schools and colleges, are breeding grounds for political activism and little else. As a result, they churn out the most mediocre engineers, scientists, writers and thinkers who are several years behind other graduates in South India.
I can list many more costs related to having a government that breathes down your neck and restricts your daily behaviour.
In the end, the health of any society or market economy relies on how well information is transmitted from one party to another. For e.g., if a pineapple farmer supplies pineapples at Rs. 50/kg (just an illustrative price) to SupplyCo, Kerala’s public procurement agency and retail depots (the Government’s answer to Reliance) and is offered the opportunity to earn Rs. 75/kg by selling to Reliance (due to improvements in logistics and supply chain efficiencies – read less middlemen, Reliance can usually offer higher prices to farmers than the public depots), his life will surely benefit from that extra income. But, by your line of reasoning and the Communist line of reasoning, you would rather buy that pineapple at Raghavan’s local mom-and-pop store than a Reliance store and thus, deprive that farmer of any benefit of selling to a free market. All because you want Raghavan to share in the profits of that fruit.
Someone pointed out in these comments that they were willing to support Reliance only if they offered higher prices to farmers. My point is that no matter what prices they do offer to suppliers, you should let them in because in a free market, they would perish if they were unable to procure products from farmers and compete with public depots. Free markets benefit both supplier and consumer because information on prices flow freely between both entities. That ceases to happen when governments intervene and explicitly prefer certain entities over others without considering the consumer and suppliers.
Yes, “Markets left to themselves do not deliver perfect outcomes. Sometimes government has to push back.” The difference is that the Communist government pushes back on everything in Kerala. They have opposed privately managed schools, ban on hartals and bandhs, private hospitals, computers, tractors, etc. The end result is that the average person in Kerala is used to being told what he or she likes or can consume. For a person who has cultivated an independent taste for the “ruthless” corporate entities, I thought you would be the last person who liked being told what to consume.
Sounds like an ad. Define “free markets”. Do you mean “free” as assumed in the Arrow-Debreau competitive general equilibrium model?
This post is filed under humor, everyone. Just a reminder.
Refusal to shop at Wal-Mart has nothing to do with communism! On the contrary, it has everything to do with democracy; the democracy for the consumer and the producer. Free market, almost by definition, is a system that leads to an enormous concentration of power and ends up preventing any chance of real democracy. This is detrimental to the consumer, the producer, the employees, the environment and the society as a whole. In fact, this is so evident that Albert Einstein clearly understood this back in 1949 and summed it up in the following critique of capitalism:
“Private capital tends to become concentrated in few hands, partly because of competition among the capitalists and partly because technological development and the increasing division of labor encourage the formation of larger units of production at the expense of smaller ones. The result of these developments is an oligarchy of private capital, the enormous power of which cannot be effectively checked even by a democratically organized political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purposes, separate the electorate from the legislature. The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information (press, radio, education). It is thus extremely difficult, and indeed in most cases quite impossible, for the individual citizen to come to objective conclusions and to make intelligent use of his political rights.” (Albert Einstein, Monthly Review, 1949)
@Paris Mallu By no means do I suggest that free markets are a way to run society. A free market is a form of economy – it’s not a political system. Yes, democracy inherently grants rights and privileges to every individual, irrespective of their economic background. A free market, by defition, ceases to exist when power and information becomes concentrated in the hands of a few. Consequently, free markets need democracies to thrive and vice versa. The scenario described by Einstein is an example of an unfree market where access to the press, radio and education (mediums of information transfer) comes at a price that marginalizes consumers at the society. It is a democratic government’s duty in this case to ensure the free flow of information by building public infrastructure and disassociating itself from political contributions. Wherever you find instances of media outlets falling into the hands of a biased few, you do find alternative mediums rising from their popularity among the marginalized many. This is particularly true of societies that have fundamentally levelled the playing field for its people – high literacy, public health etc. But, the incidents in Kerala have nothing to do with Wal-mart. It has to do with farmers, the disenfranchised many in Kerala, who are being prevented from selling to Reliance outlets because the government is more interested in protected the vested interests of a few a.k.a. traders and middlemen. Isn’t it ironic that a government that claims to protect its people from giant corporates are closing off avenues of opportunity for its own? Paris Mallu, a free market discourages such imbalances and inequities. The problem with Kerala is not that it has a free market, but that it doesn’t have one.
The post may have been humorous in intent, but it discusses a life and death matter (see Mr. Nair’s post), so its natural to expect people to be passionate about it
Passion is excellent; my comment was intended for those who were taking issue with the blogger “condoning” communism or the choices made by Kerala’s politicians. Her point was “how quirky!” not “I condone and endorse this”. Hence the “humor” reminder.
At a fundamental level, every Indian consumer is fed up with the ‘consumer experience’ they have had the pleasure of taking in the last few decades. I don’t see a groundswell of public opinion against big retail (I guess a lot of people couldn’t be bothered about it), so pardon my presumption when I think the Kerala situation is another stage managed act by you know who. If there’s one thing I’ve known in all these years, it’s that there are no such spontaneous protests in India.
I’m not sure if big retail in India would look remotely like what it is in the US or that it will succeed in wiping out local kirana stores. Starbucks does not stand a chance in the near future of wiping out the local cafes in Melbourne. For one, there is a cafe culture and it was around before Starbucks was around. And any two bit cafe in Melbourne (and this includes Japanese takeaways) makes better coffee than Starbucks. Context might matter.
Right now India is able to have both big franchises and small indendently owned businesses, both flourishing side by side, the bazaars, as well as the modern shopping malls of Old, New Delhi and Gurgaon are evidence of this.
But what has happened on Mall Road in Gurgaon is evidence that too much modern franchise right next to each other is bad business for all. Gurugaon had one modern AC mall go up which met with HUGE success. Shortly after that a similar mall right across the road opened up, and so on and so on, until what you have today is about 10 multi-level shopping malls lined up right next to each other and none of them are making profits. They haven’t learned yet that if you have a mall in an area, the next one should be built at least 5 miles from it, and so on. Better deals are found in the bazaars, but often better quality is found in the malls. And of course AC helps when it’s 105% in the shade outside.
The recent stories of the South of India are awesome. IIT-Sycthia!
Kerala – the only place on Earth where Communism did good.
To the posters on the unemployment rate – methinks it doesn’t have much to do with a lack of jobs as it does with an influx of income from family in the Gulf/Americas.
Sahej:Are you referring to the most recent issue of Outlook India ? Did you read this article ?
I found this line particularly humorous “The typical North Indian regarded (note use of past tense)the typical South Indian as short, squat, black, effete—and vegetarian”. Given that on the whole, we do tend to be shorter/blacker, what exactly is the change in how we are perceived ? a) N. Indians no longer equate shortness/backness with backwardness b) N. Indians (i.e. Scythians) are afraid of our Dravido-Lemurian “black magic” and are forced to do the bidding of us equatorial hobbits
This post is meant in jest, no flames or “I am a 6’2″ Tamilian who can slam dunk whadya think about that” responses please
Another view point. Apparently from someone still there. http://varnam.org/blog/archives/2007/07/supporting_the_trader_mafia.php